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Will oil reach $100 a barrel? Some investors are saying yes

An oil pump works at sunset Monday, Jan. 18, 2016, in the desert oil fields of Sakhir, Bahrain. AP Photo/Hasan Jamali

Crude oil prices hovered around the $45 mark Friday, but some analysts say Canada could see oil returning to the $100 mark in the coming years amid a stronger-than-expected global demand for oil.

Tim Pickering, CEO and lead portfolio manager at Auspice Capital Partner, said he is optimistic oil will return to the glory days of $100 a barrel due to an increase in demand for oil products and disarray amid the Organization of Petroleum Exporting Countries (OPEC).

“Worldwide demand is growing for crude oil,” Pickering told Global News. “We are seeing the expansion in large economies, like the fastest growing economy of India.”

READ MORE: Most OPEC members support $50-60 oil price: Iran’s oil minister

Pickering said he doesn’t see a rate cut coming OPEC in 2017, but sees reductions in drilling happening in North America.

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“It’s not going to happen immediately,” he said. “Eventually that North American supply will come back into balance, and that will be due to a sustained over price like we’ve been.”

“You’re going to have to be patient with oil prices. It could still be a tough six, or nine months, or even a year, but long term over the next few years we are bullish.”

Benjamin Tal, deputy chief economist of CIBC World Markets, doesn’t see oil reaching above $60 in the near future.

“The minute you reach over $60 you will see increased production coming from the U.S. that will increase supply,” he said. “There is no motivation from Saudi Arabia to keep prices higher than $50 or $60.”

“It will be very difficult for oil in the next few years to reach $100.”

Wall Street investors seem to share Pickering’s optimism when it comes to the price for oil.

READ MORE: Should Canadians be cheering for lower or higher oil prices?

A June report from Bloomberg suggested investors have been buying options betting that the resource reaches prices of US$80 per barrel in 2018, US$100 in 2019 and US$110 in 2020, according to data obtained from the U.S. Depository Trust and the New York Mercantile Exchange.

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And while prices may start climbing upward by 2018, they will remain stagnant through the first half of 2017, according to the International Energy Agency (IEA), which advises countries on energy policies.

[graphiq id=”3a6Dt2v0aHz” title=”Oil Reserves of OPEC Member Countries” width=”600″ height=”503″ url=”https://w.graphiq.com/w/3a6Dt2v0aHz” link=”http://country-facts.findthedata.com” link_text=”Oil Reserves of OPEC Member Countries | FindTheData” ]

The IEA projects a slowdown in oil demand, which coupled with ballooning inventories and rising supply, means the market will continue to be oversupplied.

Ambarish Chandra, assistant professor of business economics at the University of Toronto Scarborough, said when it comes to forecasting the price of oil is really anyone’s guess.

“There has been so much uncertainty for so long,” Chandra said. “OPEC is trying to re-establish control [over its members] and have some sort of pricing discipline, but it doesn’t seem to be working very well.”
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Chandra said while it’s uncertain when for demand for oil will pick up again, the days of $100 will return; it could just take five to ten years.

“We are far gone from the days of $100 a barrel for oil but those days will come back at some point,” he said. “There is no sign of it on the horizon, but at some point in our future absolutely. Whether it will be in a few years or five to ten years, I don’t know.”

*With a file from Reuters

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